Equitable’s Investment Edge® variable annuity provides clients with investment diversification, tax-deferral, and tax-efficient income distribution.
The Market1
Total variable annuity sales in 2021 reached $125.6B, up 27% from 2020. Rising concern about changes to the tax code drove growth in investment-focused variable annuities, as they provide a tax-deferred option for investors beyond traditional retirement accounts. Sales increases were also influenced by RIAs and fee-based advisors seeking tax-deferred solutions for their clients portfolios.
Why DPL Likes Investment Edge® 21 ADV
Investment Edge offers more than 110 investment options for portfolio construction to help clients increase their retirement income potential. Additionally, Investment Edge offers Structured Investment Options (SIOs), which provide market participation with a defined buffer against losses.
When clients are ready to begin taking income, the Income Edge optional benefit applies an exclusion ratio to non-qualified income distributions. When combined with the power of tax-deferral, Income Edge helps clients minimize taxes, which maximizes their income distributions. Beneficiaries who inherit an Investment Edge policy can also elect the Income Edge option, minimizing the tax burden on IRS-required withdrawals.The contract also provides a return of premium death benefit that you only pay for when your account value is less than premiums paid in.
How to Think About Commission-Free VAs
When your client needs:
ANNUITY RESCUE+: For clients looking to move assets from their high-cost traditional annuity into a low-cost, Commission-Free product, a “1035 exchange” may be appropriate. Annuity Rescue+ may help clients achieve:
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Low cost — if the goal is simply to achieve the lowest cost, DPL recommends using an investment-only variable annuity.
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Guaranteed income — often clients purchase an annuity because they like the guaranteed income feature. Depending on your investment approach, DPL will find the product that is best suited for you and your client.
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Tax-efficient withdrawal — if your client needs to begin taking income from an annuity, DPL can bring products and strategies to tax-efficiently withdraw funds.
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Return of premium — utilizing a 1035 exchange into a solution with a return of premium benefit can be a thoughtful way of essentially “locking in gains,” as the amount of the new premium will include any gains from the previous annuity. DPL brings several very low-cost and innovative strategies.
TAX DEFERRED GROWTH: For high income earners, low-cost annuities can provide tax deferral to benefit portfolio growth during a client’s accumulation phase. Studies show that tax deferral can add 1.00% to 2.00% of additional net return to a client’s portfolio, when locating tax-inefficient investments within the annuity.2
GUARANTEED LIFETIME INCOME: While other product types are generally better options for guaranteed lifetime income, variable annuities can provide the greatest investment flexibility of the product types that offer this feature — potentially generating additional growth of the portfolio. It may be more appropriate to use a low-cost VA during the accumulation phase and then, when the client is ready to begin taking out guaranteed lifetime income, move into the best available income product.
Product information sourced directly from: https://www.equitable.com
12021 Annuity Sales Highest In 13 Years, LIMRA Reports (2/2022)
2Morningstar Report: The Value of a Gamma Efficient Portfolio (2017)
Your clients should consider a variable annuity’s investment objectives, risks, charges, and expenses carefully before investing. Go to equitable.com for prospectuses containing this and other information. Encourage them to read it carefully.
Variable annuities are contracts purchased from a life insurance company that are designed for long-term retirement goals and are subject to market risk, including loss of principal.
No investment strategy insures a profit or protects against losses in a down market.
All guarantees are based on the financial strength and claims-paying ability of the issuing insurance company.
The purchase of an annuity within a retirement plan that already provides tax deferral under sections of the Internal Revenue Code results in no additional tax benefits. An annuity should be used to fund a qualified plan based upon the annuity’s features other than tax deferral. All annuity features, risks, limitations, and costs should be considered prior to recommending the purchase of an annuity within a tax-qualified retirement plan. In addition to surrender charges, withdrawals are subject to income tax.